Premier League clubs discuss a central loan fund to access cheaper interest rates

October 6 – Premier League clubs are reportedly calling on the league to establish a central loan fund of at least £1 billion to allow them to access cheaper loans than are currently being made available.

The fund would be of most benefit to clubs outside the Premier League’s big six who have ended up borrowing at rates of 7% and above to meet immediate cashflow issues, including player wage bills.

The report, in the Financial Times, says the idea of a fund has been discussed by clubs and highlights the difficulty clubs have in accessing cheaper interest rates from the major global banks – especially clubs outside the ‘big six’ of the Premier League. The finances of the smaller clubs are considered less stable, particularly with the threat of relegation and loss of Premier League centralised revenues, often hanging over their business plans.

The Premier League is in a stronger position to raise the funds at a lower rate as it can be secured against the leagues broadcast revenue streams. Not all clubs are in favour as that would potentially put a lien on their own revenues if a club defaulted on a central loan.

Premier League clubs lost an estimated £2 billion in revenue last season due to the impact of  the pandemic. A number of the smaller clubs have had little choice but to accept high interest finance. MSD Partners, the investment fund of technology billionaire Michael Dell, has become prominent in the sector and have a portfolio of clubs they loan to including one agreement with Southampton at an annual interest rate of 9%.

LaLiga has recently agreed a €2.1 billion private equity investment that will see cash filter through to its clubs – Barcelona and Real Madrid have stayed out of this agreement. Germany’s Bundesliga and Italy’s Serie A have or are looking at their own routes to private equity finance.

The Premier League has previously stated that it was not taking the private equity route to raise cash for its clubs.

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